National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (May 2024)
43 slides from National Grid's debt investor presentation, May 23, 2024
Slide 1: Full Year Results Debt Investor Update 2023/24
Full Year Results Debt Investor Update 2023/24 23 May 2024
Slide 2: Cautionary statement
Cautionary statement This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securit
Slide 3: Highlights
nationalgrid Andy Agg CFO
Slide 4: The direction of the energy transition is set
The direction of the energy transition is set… Governments all have climate targets Fully decarbonised Great Britain electricity system by 2035 New York Massachusetts 100% zero-emission 50% reduction electricity sector in carbon emissions by 2040 by 2030 Decarbonising energy across the UK and US Nor
Slide 5: Great Britain and US Northeast governments setting ambitious goals to achieve it
Great Britain and US Northeast governments setting ambitious goals to achieve it Generation mix is evolving Governments have ambitious targets Supply 5 by 2035: Great Britain (GB) generation (TWh)1 15 GW ► up to 85 GW in GB Offshore Wind 0 GW ► up to 20 GW in US jurisdictions Onshore 30 GW ► up to 9
Slide 6: Increased clarity on investment plans
Increased clarity on investment plans Increased visibility over last 6 months • Scale of future investment • Delivery profile • Regulatory frameworks Significant progress, providing confidence to set out plans for the next 5 years 6 National Grid plc Full Year Results 2023/24
Slide 7: Increased clarity on investment plans
Increased clarity on investment plans UK Electricity Transmission US Regulated 17 Accelerated Strategic Transmission Downstate NY KEDNY/KEDLI rate plan Scale Investment (ASTI) projects in licence • c.$5bn capex over 3 years • Mid-high teens £billions Upstate NY Niagara Mohawk (NiMo) upcoming rate fi
Slide 8: Increased clarity on investment plans
Increased clarity on investment plans UK Electricity Transmission US Regulated 17 Accelerated Strategic Transmission Downstate NY KEDNY/KEDLI rate plan Scale Investment (ASTI) projects in licence • c.$5bn capex over 3 years • Mid-high teens £billions Upstate NY Niagara Mohawk (NiMo) upcoming rate fi
Slide 9: Increased clarity on investment plans
Increased clarity on investment plans UK Electricity Transmission US Regulated 17 Accelerated Strategic Transmission Downstate NY KEDNY/KEDLI rate plan Scale Investment (ASTI) projects in licence • c.$5bn capex over 3 years • Mid-high teens £billions Upstate NY Niagara Mohawk (NiMo) upcoming rate fi
Slide 10: Driving a significant step-up in investment & growth
Driving a significant step-up in investment & growth c.£60bn capital investment Near doubling of investment (FY25-FY29) New 5-year framework (£bn) c.£60bn c.85% Green investment Last 5 years aligned to EU taxonomy £33bn One of the FTSE’s biggest investors in the energy transition FY20 FY21 FY22 FY23
Slide 11: New 5-year financial framework
New 5-year financial framework FY2025 - 2029 Capital investment c.£60bn – c.£51bn green1 c.£100bn c.£23bn c.£17bn group assets by FY292 UK Electricity Transmission New York Regulated c.£8bn c.£11bn UK Electricity Distribution New England Regulated An attractive c.£1bn proposition of NG Ventures grow
Slide 12: Strong track record of delivery
Strong track record of delivery Expertise Organisation in large infrastructure set up to deliver World-leading capability in subsea cabling c.£1bn Strategic Infrastructure Hinkley Connection Project new business unit c.£1bn London Power Tunnels 2 Supply chain innovation c.$4bn New York 7.8GW Exceede
Slide 13: High-growth pureplay networks
High-growth pureplay networks Streamlined portfolio focused on regulated and competitive, onshore and offshore networks Refocused NG Ventures • UK Interconnectors and Offshore Hybrid Assets • US competitive electricity transmission Crystalising value • National Grid Renewables • Grain LNG 13 Nationa
Slide 14: Key headlines
Key headlines Strong financial performance in 2024 Underlying operating profit Underlying EPS Reliability £4,773m 6% 78.0p 6% 99.99% FY23: £4,518m FY23: 73.6p FY23: 99.99% Regulated networks capital investment Asset Growth Safety - LTIFR £7,571m 17% 9.7% 170bps 0.08 FY23: £6,462m FY23: 11.4% Group T
Slide 15: Operational performance highlights
Operational performance highlights UK New England Electricity Transmission 14% 47% increase in capital investment1 increase in capital investment • $2bn Electric Sector Modernization Plan filed • ASTI New York • 131 miles of leak prone pipe • Hinkley Connection Project £2.7bn replaced • London Power
Slide 16: Financial Performance
Financial Performance Alexandra Lewis Group Treasurer
Slide 17: Financial performance highlights
Financial performance highlights Strong delivery in 2024 Underlying operating profit Underlying EPS Cost efficiency delivery £4,773m 6% 78.0p 6% £513m FY23: £4,518m FY23: 73.6p Target by end of FY24: £400m Dividend growth Return on Equity in line with policy Capital investment 8.9% 210bps 58.52p 5.5
Slide 18: Investment driving asset growth
Investment driving asset growth 1 Capital investment UK Electricity UK Electricity System Operator £8,235m 11% Distribution £1.2bn <£0.1bn FY23: £7,430m New York 1 £2.7bn Regulated networks capital investment Capital £7,571m 17% UK Electricity Transmission Investment 1 FY23: £6,462m £1.9bn £8.2bn As
Slide 19: UK Electricity Distribution
UK Electricity Distribution Return on equity Underlying operating profit (£m) Outperformance • Shift from RIIO-ED1 to ED2 • Lower incentives in first year 110bps (45) Net Revenue (31) (2) of ED2 Outperformance Controllable Other costs Targeted operational outperformance: 100-125bps Achieved FY23 FY2
Slide 20: UK Electricity Transmission
UK Electricity Transmission Return on equity Underlying operating profit (£m) Outperformance • Revenues supported by (14) (37) indexation and higher allowed 147 Depreciation (7) returns 100bps Controllable costs Other Outperformance 118 Western Link • Non-recurrence of Western Link return (FY23) ret
Slide 21: US Regulated – New York
US Regulated – New York Underlying operating profit (£m) Return on equity 51 (61) • KEDNY/KEDLI and NiMo rate 55 (92) increases 96% 221 Bad Debts Controllable Costs Depreciation Other1 1,016 • Smart Path Connect early recoveries of our allowed Net baseline return revenue • Continued delivery of cost
Slide 22: US Regulated – New England
US Regulated – New England Underlying operating profit (£m) Return on equity • Higher rates in electric and gas 3 businesses 2 months RI Controllable 93% contribution in PY Costs (25) Bad (41) (47) • Higher depreciation of our allowed (52) 176 Debts Depreciation Other • 2 months inclusion of Rhode b
Slide 23: NG Ventures
NG Ventures Year ended 31 March 31 March Operating profit (£m) 2024 2023 Grain LNG 149 131 Operating profit and post tax share of JVs Smart Metering 13 4 • North Sea Link cap increase Interconnectors 306 355 Business Development & Other (14) (15) • BritNed lower auction revenues US Ventures 15 14 •
Slide 24: Other activities
Other activities Year ended 31 March 31 March Operating profit (£m) 2024 2023 Operating profit and post tax share of JVs Property 30 216 • Absence of property sales completed in the prior Corporate & other (151) (179) year as part of the St William JV disposal US Other 22 12 NG Partners (13) (25) In
Slide 25: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £1.5bn 15.6% 3 £2,879m 1% lower than FY23 Underlying tax charge: £515m3 FY23 : £2,694m3 • Lower inflation and • 170 bps lower than • 78.0p/share – up 6% repayment of the bridge prior year3 loan facility du
Slide 26: Cash flow and net debt
Cash flow and net debt Cash generated Net debt (£bn) from operations1 £7.3bn 1.7 0.4 Other (0.8) UK Gas FY23: £6.4bn 1.7 Dividend disposal Net cash interest & (7.3) 7.6 accretions Net cash outflow 2 (0.2) Op cash JVs & £3.7bn flow Capital Associates investment FY23: £3.1bn Net debt 3 Opening Closing
Slide 27: Driving a significant step-up in investment & growth
Driving a significant step-up in investment & growth c.£60bn capital investment Near doubling of investment c.10% group asset (FY25-FY29) growth (£bn) New 5-year framework CAGR FY25-29 c.£60bn c.£100bn group assets by FY291 Last 5 years £33bn c.85% Green investment aligned to EU taxonomy One of the
Slide 28: A comprehensive financing plan
A comprehensive financing plan A strong investment grade balance sheet positioned to deliver an unprecedented step up in capital investment • Raise of £7bn supports increased investment levels Equity • 7 new shares for every 24 existing shares. Issue price of 645 pence. • Continued issuance of senio
Slide 29: Rights Issue timetable and terms
Rights Issue timetable and terms Launching a fully underwritten, 23 May 10 June 12 June £7 billion rights issue FY results and Rights 24 May Last day for Results of Issue launch announcement Start of rights trading acceptance of rights Rights Issue • 7 new shares for every 24 existing shares • Issue
Slide 30: FY25 Guidance
FY25 Guidance Underlying EPS (illustrative) Continued strong underlying business performance across the group • Broadly flat underlying EPS, taking into account the increased share count and reduced interest charge 78.0p 6-8% CAGR from FY25… Adjusted Bonus for bonus and • 6-8% underlying EPS CAGR ou
Slide 31: New 5-year financial framework
New 5-year financial framework FY2025 - 2029 Capital investment c.£60bn – c.£51bn green1 c.£100bn c.£23bn c.£17bn group assets by FY29 2 UK Electricity Transmission New York Regulated c.£8bn c.£11bn UK Electricity Distribution New England Regulated An attractive c.£1bn proposition of NG Ventures gro
Slide 32: Financing National Grid's operations
Financing National Grid’s operations Debt issuance Issuance programmes • External debt is raised by our operating companies, our US National Grid National Grid National Grid National Grid holding company National Grid North America and by the plc (NG) North America Electricity Electricity (NGNA) Tra
Slide 33: Long-term debt issuance strategy
Long-term debt issuance strategy 2024/25 issuance expectations • Lower issuance of up to ~ £4bn, as we utilise the rights issue proceeds, reflecting: – Continued issuance from US OpCos for regulatory reasons – Potential to smooth group issuance over FY25/FY26 • Beyond FY25 we expect issuance to incr
Slide 34: Priorities & Outlook
Priorities & Outlook Andy Agg CFO
Slide 35: New York
New York NGV FY25 Priorities c. £17bn UKET • KEDNY / KEDLI – Focus on delivering against higher allowed returns 9.35% c.60% vs prior 5 years c.£60bn • NiMo rate case filing NY – Significant electric transmission investment – Connections for EV, heat pumps and distributed generation ED – Working to p
Slide 36: New England
New England NGV FY25 Priorities c. £11bn UKET • Massachusetts Electric rate agreement c.60% • Progress ESMP filing vs prior 5 years1 NY c.£60bn • DPU order on role of local gas companies in achieving 2050 climate goals • Continue to advocate for Clean Energy Vision NE ED Growth drivers: • ESMP incre
Slide 37: UK – Electricity Transmission
UK – Electricity Transmission NGV FY25 Priorities c. £23bn UKET • Progress ASTI projects – Begin construction on: c.3.5X – Eastern Green Links 1 & 2 vs prior 5 years NY c.£60bn – Four onshore projects – HVDC framework tender ED • RIIO-T2 NE – Connect over 4GW: Greenlink, Dogger Bank – Hinkley Connec
Slide 38: UK – Electricity Distribution
UK – Electricity Distribution NGV FY25 Priorities c. £8bn UKET • Delivering 100-125 bps of outperformance >30% • Progress towards £100m of group synergies over 3 NY: £17bn years p.a. vs ED1 NY c.£60bn • Connections reform: plans to release 10GW of capacity • DSO function to aid smarter, two-way netw
Slide 39: NG Ventures
NG Ventures Re-focused NGV • UK Interconnectors and Offshore Hybrid Assets • US competitive electricity transmission Launch sale processes for National Grid Renewables Grain LNG 39 National Grid plc Full Year Results 2023/24
Slide 40: A new and exciting phase of growth
A new and exciting phase of growth A significant step up in investment and growth Acceleration of the energy transition c.£60bn investment through to 2029 Pureplay networks business Driving long-term value growth and shareholder returns 40 National Grid plc Full Year Results 2023/24
Slide 41: Q&A
Q&A 41 National Grid plc Full Year Results 2023/24
Slide 42: Appendices
Appendices 42 National Grid plc Full Year Results 2023/24
Slide 43: Impact to total dividend level and DPS
Appendix Impact to total dividend level and DPS Maintaining total dividend level Aim to grow rebased dividend per share (DPS) in line with UK CPIH Growth in line with UK CPIH DPS rebased by c.15% as a result of new shares issued 58.52p 53.1p2 45.3p £2.2bn1 FY24 declared total dividend Indicative FY2
National Grid — Debt Investor Presentation (May 2024) on 6ix